M/S ASHOKA TRADING CO. vs. COMMR. OF INCOME TAX KARNAL

This appeal was admitted by this Court vide order dated 22.1.2007 for determination of the following substantial question of law:- “Whether under the facts and circumstances of the case the Tribunal is justified in arriving at the findings on the true and correct interpretation of the provisions of Section 68 which are misconceived?”

Briefly stated the facts for adjudication as narrated in the instant appeal are that the assessee filed its return of income on 31.8.1997 for the assessment year 1997-98 declaring an income of Rs.59,110/-. The case of the assessee was taken up for scrutiny and the Assessing Officer found the credits in the names of Ram Kumar and -2- Risal of Rs.40,000/- and Rs.86,012/- respectively to be genuine whereas credit of Rs.40,000/- in the name of Smt. Sarla Devi was held to be unexplained. Accordingly, vide order dated 31.1.2000 the Assessing Officer made various additions and completed the assessment at Rs.1,42,560/-. Feeling aggrieved, the assessee approached the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”] who vide order dated 5.5.2003 partly allowed the appeal. However, the addition of Rs.40,000/- made by the Assessing Officer on account of cash credit in the name of Sarla Devi to be unexplained income of the assessee under Section 68 of the Act was affirmed. On further appeal by the assessee, the Income Tax Appellate Tribunal, Bench “A”, Chandigarh (hereinafter referred to as “the Tribunal”) vide order dated 24.3.2006 while partly allowing the appeal of the assessee, upheld the aforesaid addition of Rs.40,000/-. Hence, the present appeal by the assessee.

We have heard learned counsel for the parties.

The solitary question in this appeal is with regard to the addition of Rs.40,000/- under Section 68 of the Act which has been sustained by all the three authorities below.

The Tribunal while upholding the aforesaid addition had held as under:- “We have given our careful consideration to the rival contentions. It is well settled principle of law that the onus to establish the genuineness of the credit in the books of accounts is upon the assessee. Mere filing of confirmatory letters or particulars is not enough to discharge the onus. Even filing of the affidavit of the creditor is not sufficient to discharge the onus. This -3- principle of law is established by the ratio of following decisions: i) Sree Lekha Banerjee & others Vs. CIT 49 ITR 112(SC). CIT Vs. Ruby Traders & Exports Ltd. 182 CTR 596 (Cal). Court of Punjab & Haryana in the case of Smt. Shanti Devi (supra) to support the finding that where the creditor did not maintain any personal books of accounts, the Assessing Officer is entitled to enquire and satisfy himself about the sources of money in the hands of the creditor. In this case, though the creditor had admitted to have advanced the money to the assessee, the source of money deposited in the bank account out of which the money was advanced to the assessee was not explained. The mere statement that a sum of Rs.40,000/- was saved out of house-hold expenses is bereft of substance. The lady creditor does not have any source of income and therefore, accumulation of Rs.40,000/- cash, advanced to the assessee, routed through bank account is not satisfactorily explained. The Assessing Officer was, therefore, justified in making the addition of Rs.40,000/-. The additional evidence furnished by the assessee before us is also of no consequence in so far as the source of credit of -4- Rs.40,000/- has not been satisfactorily explained. Mere payment by cheque is not enough to discharge the onus. We, therefore, confirm the addition of Rs.40,000/-.”

The Assessing Officer, CIT(A) and the Tribunal on appreciation of the evidence on record had arrived at the conclusion that the cash credit of Rs.40,000/- in the name of Smt. Sarla Devi was unexplained income of the assessee under Section 68 of the Act as the explanation furnished by the assessee was not satisfactory. Learned counsel for the appellant made valiant efforts to demonstrate that the finding recorded was perverse but only effort was to reappreciate the evidence and conclude otherwise. This does not fall within the domain of Section 260A of the Act. The Tribunal has taken a plausible view on appreciation of material on record. Accordingly, the substantial question of law is answered against the assessee and finding no merit in the appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE December 3, 2010 (ADARSH KUMAR GOEL) gbs JUDGE